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Sunday, April 11, 2010

Health care's two ticking bombs

A week ago, a good friend -- let's call him Anthony -- related a remarkable story about shopping for health insurance in two states, New York and Arizona.

For Anthony and millions of other consumers, New York represents the ultimate nightmare for finding affordable coverage, pairing outrageously high prices with a tiny roster of offerings. By contrast, Anthony found fabulous bargains and a rich variety of policies in Arizona's desert sun.

So it would be wonderful for folks like Anthony if the historic health-care reform law scuttled the rules that created the disaster in New York, and made America's insurance markets a lot more like Arizona's.

But amazingly, the bill imposes a New York-style regime on the rest of the nation, then makes a gigantic bet that the results won't mimic those of the Empire State.

That's the problem with Obamacare: It's staking its entire success on a complex web of subsidies and penalties designed to pull young and healthy Americans into the insurance system, even as their policies get more expensive. As we'll see, that's an extremely risky wager.

Let's look at the great deals Anthony found, then handicap whether they'll flourish, or more likely, vanish under the new law. Anthony commutes back and forth from New York City to the Phoenix area, where he started a real estate business. He's a handsome, strapping six-footer in his early 40s.

Anthony first looked for individual health insurance in New York. The rates shocked him: around $1,200 a month for a basic HMO plan from carriers like Aetna and Empire, and over $1500 for a point-of-service policy that allow customers to choose out-of-network doctors in exchange for higher co-pays.

To make matters worse, Anthony wanted an inexpensive, high-deductible policy, but he couldn't find a suitable one in the New York individual market.

So Anthony went shopping where he works -- in Arizona. There, he found a far wider menu of offerings, including the inexpensive, high-deductible policies that best fit his needs. (Continues here)